Market benchmarks were trading with modest gains in the afternoon session on September 22 as investors made a cautious return to equities after a three-day selloff.
At 12.01 pm, the 30-pack BSE Sensex was trading 122.90 points, or 0.19 percent, higher at 66,369.29, while the broader NSE Nifty inched up 36.96 points or 0.19 percent to 19,779.30.
A total of 1,672 stocks advanced, 1,709 declined and 205 counters remained unchanged on the BSE.
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Sector-wise, banks, financial services, capital goods, energy and telecom were trading in the green, while healthcare, power, IT and commodities notched up losses.
The BSE mid-cap and small-cap indices shed up to 0.04 percent.
Continuing their selling spree, foreign institutional investors (FIIs) offloaded Indian shares worth a net of Rs 3,007.36 crore on September 21. FIIs have sold domestic shares worth Rs 8,288.74 crore this month so far.
SBI was the top gainer in the Sensex pack, climbing around 2 percent. PSU banks were trading in the green after JPMorgan’s decision to include Indian bonds in its emerging-market index boosted investor sentiment.
Analysts expect a significant boost to the domestic financial ecosystem if Indian government bonds are included in all three major EM bond indices -- JP Morgan EM bond index, FTSE EM bond index, and Bloomberg Barclays EM bond index.
MC Explains | What does JPMorgan index inclusion mean for India, investors
"…we can estimate total flows to be at least $40-50 billion in the medium term (6-12 months) if IGBs get included in all three indices. This is a significant number because not only does it provide an alternative source of financing for government borrowings, but it also opens up the space for corporate issuers as well as bringing the entire yield curve down significantly once all the inclusions are in place", said Satyakam Gautam, Rates trader, ICICI Bank.
Gautam added that as national banks' balance sheets become more available, they can allocate more funds to the private sector.
Maruti Suzuki was another prominent gainer, spurting over 1 percent after positive brokerage commentary.
Global brokerage firm Morgan Stanley remained ‘overweight’ on the counter, sharing a target price of Rs 11,963 apiece.
“Maruti’s business is turning around on expected lines. The sport utility vehicle (SUV) market share gains and volume recovery are now more vivid. Earnings before interest, tax, depreciation and amortisation (Ebitda) margin could rise to 11 percent in the July-September quarter of the fiscal year 2023-24 (Q2FY24) from 10 percent in Q1FY24,” the brokerage firm added.
Analysts at Citi shared a ‘buy’ call on the Maruti, raising the target price to Rs 13,600 per share.
“The recent trends in product mix bolster a positive stance and improving mix, that is, a higher proportion of utility vehicles (UVs) would aid overall earnings. The decline in small car sales would have been a big negative for the company a year ago, however, the success of recent models has insulated the company from soft demand for entry-level cars. Entry-level cars account for nearly 57 percent of FY24 year-to-date (YTD) volumes,” they added.
In contrast, Wipro was the biggest loser among the Sensex constituents, slipping around 2 percent after the company’s long-serving CFO Jatin Dalal resigned, in a continuing spate of high-level exits at the Indian IT giant.
Wipro’s former board member Suresh Senapaty -- one of Azim Premji’s most trusted advisors -- said he was disappointed at Dalal’s abrupt exit. Senapathy, who is still associated with Wipro at multiple levels, urged the Indian IT firm to work harder to retain talent.
Other laggards included Power Grid, Sun Pharma, Titan, Tata Steel and UltraTech Cement.
In the primary market segment, Zaggle Prepaid Ocean Services shares saw a lacklustre debut on the bourses on September 22. The stock started trading at Rs 164 on the NSE and Rs 162 on the BSE, against the issue price of Rs 164. The listing was in-line with analyst expectations of a tepid listing as the grey market premium (GMP) was also muted a day ahead of listing.
Samhi Hotels listed at just a 6.75% premium over the IPO price of Rs 126 on September 22. The stock listed at Rs 134.50 on the NSE and Rs 130.55 on the BSE. Several analysts have recommended booking profits and advised investors to consider other avenues for investment.
On the global front, Asian markets were trading mixed after the Bank of Japan left short-term rates below zero.
MSCI's index of global equities was flat, with a 2.6 percent drop for the week so far.
MSCI's index of Asia-Pacific shares ex-Japan touched a 10-month low before bouncing 0.5 percent on vows in China to support private business.
The Bank of Japan (BOJ), as expected, maintained super-low interest rates and left its outlook and yield control policy unchanged to signal it was in no hurry to end massive stimulus.
The yen fell about 0.4 percent to 148.12 per dollar after the announcement but stopped short of Thursday's 11-month low.
"The Fed’s hawkish pause message has created a global risk-averse sentiment in global equity markets. The spike in the dollar index to 105.52 and the US 10-year bond yield shooting up to a 16-year high of 4.5 % are negative for equity markets, particularly emerging markets. The FIIs have reversed their ‘Buy India strategy’ which they have been following in the last 3 months….” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Countering this negative trend is the hugely positive news of JP Morgan including India in the Emerging Market Bond Index with a weightage of 10 percent from June 2024 onwards, he noted.
“In the near-term, FIIs may press further selling in response to rising US bond yields. If this happens it will open up opportunities for investors to buy quality large-caps, particularly banking stocks which will benefit a lot from the bond inclusion," he added.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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